THE JOB MARKET WILL
REMAIN TIGHT
Talk about power to the people! The current economic condition is capitalism's version of just that. The jobs market, as almost everyone knows, is as tight as it has been for years. And now, a just-released survey finds that it is not going to improve in the months ahead, as we move to the new millennium.
The survey, conducted by Milwaukee-based Manpower Inc., found that companies across the country will continue to have recruiting problems next year. Manpower conducted a survey of some 16,000 businesses across the country, and reports that 24% of the businesses say they will higher more workers in the first quarter of next year. Ten percent of the surveyed employers said they would be cutting their work force, while 61% said they did not intend to make any major changes.
The study comes as the nation's unemployment rate stands at 4.1%, the lowest rate in 30 years. The problem is two-fold. When labor markets are tight, wages tend to increase, and that can fuel inflation. Additionally, a lack of workers — especially skilled workers — makes it harder for businesses to be competitive and increase productivity.
Recently, the Federal Reserve raised interest rates for the third time in the last couple of months, to slow the business expansion and extend any trend toward rising prices. Many experts, however, doubt that the three increases instituted by the Fed, which really did little more than bring us back to where we were before the international financial crisis of late last year, are going slow down our rapidly growing economy.
Jeffrey Joerres, president and Chief Executive Officer of Manpower, says the high demand for workers in the new year means that companies will have to stretch their resources even further and figure out new ways to operate with fewer people. Joerres said, "The type of worker being sought in the New Year increasingly is more skilled or higher educated than in the past. The pool of such people is running dry."
Joerres also said businesses should not anticipate any quick relief from the lack of employees, because education and training programs need more time to adjust to the current needs of the economy.
Of the ten industry sectors surveyed by Manpower, the biggest demand for workers came from manufacturers of durable goods, where fully 30% of the firms reported plans to hire new people in the New Year. Demand for workers was also particularly strong, according to Manpower, in the service industry and among the manufacturers of non-durable goods.
The problem — if we can call it a problem — of the tight labor market looks like it will continue well into next year. For the workers it is really a benefit, in that they should be able to increasingly make higher wages as employers fight to keep and attract new and better employees. A situation like this also allows workers to move up the job ladder, improving their positions within their existing company, or by having the ability to move to another company who will offer a better position. This is, as we said, "power to the people."
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In a related item … the president of the Federal Reserve Bank of Chicago, Michael Moskow, has urged Midwest businesses to focus on training and education to retain its existing workforce, or it could face labor shortages in the future. Moskow said a slowly growing labor market in the Midwest is becoming a problem. He said, "The public and private sector must develop new strategies to retain people. If we don't, we are at risk of running short of workers at competitive wages."
Population growth in the Midwest is up only about a half of one percent this year, and that is half the national rate. Therein lies the problem. Moskow said that aside from making the Midwest a better place through a clean environment and low crime rate, the region has to enhance educational opportunities to expand the existing labor pool, either by attracting new workers or by retaining previously unemployable people.
And, Mr. Moskow said something we have brought up repeatedly in these reports: "Offering opportunities for retraining and education to the labor force is simply good business."
Unfortunately, many business people still seem more than willing to invest in new plants and equipment, but often neglect a similar investment in their own workforce.
(Tom Butenhoff is a First Vice President with J. E. Liss & Company in Milwaukee. The views are his and not necessarily those of Liss Financial Services or the Job Connection/Hiring Network.)